I can't resist putting in my two cents on the Microsoft bid for Yahoo.

My take is that it helps neither company. Here's why.

Microsoft has assembled a huge Internet presence. They have done it in a very workman-like way.

They decided the web was important so they started, and eventually won, the browser wars. The misconception on Microsoft's part was that browsers were important when in actuality it was the Internet itself that was important. The ability to be a player that could take advantage of the Internet's reach, its content, its ability to extend communication and community globally turned out to be much more valuable than controlling the on-ramp to the web. The browser was another piece of desktop software, something Microsoft was very good at developing, but the browser meant little in terms of signaling that Microsoft really understood the web.

Content is king, or is it?

Since the browser wars Microsoft has determined that they needed to expand their web presence. They purchased and expanded Hotmail in order to establish a foothold in the free web-based email space. The success of Hotmail ensured a steady stream of users and eyeballs to Microsoft properties. As successful as Hotmail has been, it has not been a particularly innovative concept. The same with their instant messenger offering, something which was done first by AOL.

News and Finance are strong areas in Microsoft's content lineup. Once again, these are not innovations but a response to the success other sites, including Yahoo, have had with this kind of content. To Microsoft's credit, they have done a very good job crafting this content and have been rewarded with strong traffic and solid revenues.

And so it goes with online product after product. MSN.com offers all the same kinds of content Yahoo does including search, shopping, games, etc. In spite of the traffic numbers and billions in revenues, Microsoft still loses money on their Internet initiatives.

The similarities between the two company's web offerings are striking as are the similarities in investors' attitudes toward them. Both are perceived to be in a situation where they offer excellent content, generate huge amounts of traffic but fail to monetize the operations sufficiently. And both are widely considered to have missed the transition from Web 1.0 to Web 2.0. It is looking like Microsoft's investment in Facebook came at the peak of the social networking phenomena. Recent reports suggest traffic to Facebook is beginning to fall off.

Why putting Yahoo and Microsoft together would improve this situation is a mystery to me. I just don't see where greater scale makes a $44B difference.

Fighting it out on the advertising front --

So it is clear that both companies are having trouble wringing profits out of their marquee web properties.